If you’re thinking about buying a home financed with a Mortgage and at the same time you want to explore the possibility of doing so through a judicial auction, the following article will clarify many of the questions you may have about it.
Characteristics of judicial auction
When someone hires a third party (usually a bank) a loan guaranteed by a mortgage on a property and cannot pay for the loan, the creditor asks a judge to auctioning that property to the highest bidder and with the results of the auction pays for the whole debt or part of it. The court sets a date for the auction and a minimum price; if there is no one interested, they will set other auctions with lower base prices, so with a little luck you can purchase a home below its market value.
Conciliate two procedures
To take part in the auction you must pay using a bank guarantee ticket issued to the court on 10% the amount set as the base price. Moreover, if you make the best offer and they assign you the property, you will have 10 days to pay the rest. If you don’t do it within that period, you can lose not only the right as the winner, but also what you gave for guarantee.
This is indeed the biggest difficulty to finance the purchase through a mortgage, because the process for requesting it takes between 30 and 60 days. In addition, the bank will require certain documents on the property you would have to ask to the court, which may delay the operation.
Nonetheless, before dismissing this mechanism, consider some other options. Thus, you could apply for a Mortgage by temporarily giving other property as guarantee (one owned by a family member, provided he accepts it, of course) or expanding an already existing mortgage.
You could also try to count on one foot (or initial fee) with more own resources than the usual and apply for a personal loan for the difference, with the guarantee or security of others, while you wait for the conditions for mortgaging the property you acquire in the auction.
As you can see, although it is difficult to buy a home in judicial auction and to finance it with a mortgage, it is not impossible, especially if you temporarily use other mechanisms.